Out of the loan guarantee scheme of ₹ 1.1 lakh crore, the health sector will get ₹ 50,000 crore to scale up medical infra and other sectors will receive ₹ 60,000 crore
Finance Minister Nirmala Sitharaman today announced eight new schemes to boost an economy ravaged by Covid, with a special focus on health and tourism. The measures include a ₹ 1.1 lakh crore loan guarantee scheme for the Covid-affected and an additional ₹ 1.5 lakh crore under the Emergency Credit Line Guarantee Scheme (ECLGS) that was launched as part of Atmanirbhar Bharat package last year. The announcements come at a time the country is emerging from a devastating second wave of the coronavirus and is bracing for a possible third wave.
- Out of the loan guarantee scheme of ₹ 1.1 lakh crore, the health sector will get ₹ 50,000 crore to scale up medical infra, specially targeting under-served areas, in light of the health crisis of the century. The interest rate has been capped at 7.95 per cent. Other sectors will receive ₹ 60,000 crore at a maximum interest rate of 8.25 per cent annually.
- Ms Sitharaman has announced additional ₹ 15,000 crore for public health. This amount will be utilised to prepare for short-term emergencies and improve paediatric care facilities. The finance minister has also promised support to the battered tourism sector in the form of Rs 10 lakh loan to travel agencies and ₹ 1 lakh loan to tourist guides. Tourist visas will be provided free to the first 500,000 tourists when the process begins.
- Among other measures, Ms Sitharaman announced widening of the Emergency Credit Line Guarantee Scheme under which collateral-free loans are given to MSMEs or or Micro Small and Medium Enterprises. A new scheme will give up to ₹ 1.25 lakh loan to 25 lakh small borrowers at lower interest rates.
- In an attempt to boost employment, the finance minister announced that the Atmanirbhar Bharat Rozgar Yojana will be extended from June 30, 2021 to March 31, 2022. The scheme incentivizes employers to create new employment through Employee Provident Fund Organisation.
- In a boost to exports, the finance minister has announced an export insurance cover of ₹ 88,000 crore for merchandise exports and ₹ 33,000 crore to project exports. The money would be channelised through Export Credit Guarantee Corporation and National Export Insurance Account (NEIA) trust respectively.
- Continuing with the centre’s efforts to promote manufacturing, Nirmala Sitharaman announced that the Production-Linked Incentive (PLI) scheme for large scale electronics manufacturing will be been extended by a year. The scheme, which was suppose to begin in 2020-21 and continue for a period of five years, will now continue till 2025-26.
- And to provide broadband connectivity to 2.5 lakh panchayats across the country, an additional amount of ₹ 19,041 crore will be provided for the BharatNet project.
- As the monsoons have arrived in the western and southern parts of the country, the finance minister announced additional amount of ₹ 14,775 crore for DAP and NPK-based complex fertilizers.
- The government has announced several measures since the beginning of the covid pandemic, including the first stimulus package called Aatmanirbhar Bharat in May last year. That package had included monetary and fiscal support worth ₹ 21 lakh crore, which the government had said was equivalent to 10 per cent of the country’s gross domestic product.
- The latest measures unveiled by the Finance Minister assume significance in the backdrop of the RBI’s estimate in its monthly bulletin for June 2021 that the second Covid wave may result in a loss of ₹ 2 lakh crore during the current financial year as region-specific containment measures and the virus’ spread into smaller cities and villages sapped rural demand.